How Does a Mortgage Broker Get Paid?

December 4, 2009


Week number 2 of “Ask a S.O.B”. This question didn’t come from a reader but is probably the question I most commonly get asked during the first conversation with a client.
How Does A Mortgage Broker Get Paid?”
I think sometimes people are a little embarrassed or they feel it’s taboo to ask this perfectly valid question. It is only fair that I answer, since during the course of the mortgage I am required to ask my client’s some very personal question about money and their relationships.
I’ll answer the question with a little Q & A:
How Much Does Your Service Cost? Its FREE! If your mortgage can be attained through a conventional bank or lending institution and doesn’t require “specialty” or private financing then the cost for our service to you is ZERO. Much like other professionals in the financial industry I get compensated through a finders fee.
How Do I Know That You Don’t Have Incentives To Take Me To A Specific Lender? I get compensated by the lender through ‘finders fees’ and those finders fees are fairly standard throughout the industry regardless of which bank we arrange your financing through, this way you can be sure that there are no conflicts of interest and that I am always looking for the mortgage that will serve you best.
So How Much Do You Get Paid By The Lender? Since you are openly talking about money to me, I feel it is only fair that I talk openly about money with you! Generally speaking I get compensated 0.80% of your mortgage amount for a fixed 5 year mortgage. If the term is less, then I earn less finders fees closer to 0.65%. If the term is more than 5 years, like a 10 year term mortgage then the compensation is closer to 1.25% of the mortgage amount.
Why Are You In Business & Why Would You Share This Info With Me? The dollar amount of our compensation is not the real value of my business, and takes a back seat to giving you the “Wow!” experience. Why? Because if I don’t:
-meet and exceed your expectations,
-provide you with advice that is in your best interest,
-develop a professional relationship built on trust and integrity
then the probability of you referring business to me or relying on my service again in the future is very slim.  As a brokerage we have been in business for 33 year only because we uphold this as the focus of our business.
Keep those questions coming in!
Christopher Molder – Son Of A Broker


Christopher Molder

Mortgage Broker

Christopher is a mortgage broker based in Toronto, Canada. And a son of a broker too. He’s a second generation mortgage broker. Following in his father’s steps he joined the family mortgage business straight out of university.